Cenvat credit on section 35F deposit allowed where no misdeclaration, fraud or suppression was found.

Cenvat credit could not be denied merely because the payment was made through a deposit under section 35F and reflected in a supplementary invoice, where there was no finding of misdeclaration, fraud or suppression. The text distinguishes refund cases involving section 35F deposits from the present credit issue and treats the deposit, on these facts, as linked to the underlying duty liability rather than a mere refundable pre-deposit. On that basis, the credit was allowable and the related demand and penalty were not sustainable.

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Issues: Whether Cenvat credit could be denied on the amount deposited under section 35F of the Central Excise Act, 1944 and reflected through supplementary invoice, in the absence of misdeclaration, fraud or suppression.

Analysis: The amount deposited under section 35F was treated by the Court as linked to the duty liability in the present factual setting, and not as a mere refundable pre-deposit in the context of unjust enrichment. The Court distinguished decisions dealing with refund of section 35F deposits, noting that those authorities addressed a different question. The supplementary invoice was issued under the Cenvat credit scheme, and the adjudicating authority had recorded no finding of misdeclaration or suppression. On the facts, there was no basis to deny credit merely because the payment originated from a section 35F deposit.

Conclusion: Cenvat credit could not be denied to the assessee, and the demand and consequential penalty were unsustainable.

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